Preserving Confidentiality of a Settlement Agreement

But We All Agreed to Confidentiality? Preserving Confidentiality of a Settlement Agreement

By: Patrick Strubel and John Isaac Southerland
Alabama Defense Lawyers Association Journal
Fall 2014, Volume 30, Number 2

Congratulations! You are on the verge of successfully finalizing a negotiated settlement on behalf of your client. Investigation is complete. Documents have been subpoenaed. Witnesses have been deposed and discovery is closed.  Your client is pleased that you are going to be able to negotiate a favorable settlement on their behalf and save them time, stress and money of needing to conduct a trial on the merits.

The client’s requests at this point are simple, right? Finalize the settlement and make sure to include certain material terms and conditions, namely, confidentiality of the settlement amount.  You speak with the other party’s counsel and she agrees – confidentiality will be a material term of the release.  All is well.  But wait, the settlement will be approved in a hearing in open court.  In this open court proceeding, the court must be presented with, among other things, the terms and amount of the settlement.  If it is in open court, the terms and amount will be part of the judicial record.  They will no longer be confidential absent specific court order.  A material term of the settlement requested by your client will be effectively eviscerated.

You speak to the opposing party’s counsel and they will not agree to seal the record during the hearing.  Is this right?  Is this fair?  Is this just?  What will the Court do?  How do you advise your client?  These are all questions that may be running through your head.  Your job is to work as hard as you can to maintain the best interests of your client.

As simple as the concept may seem, the law essentially is unsettled when it comes to determining whether the parties’ contractual settlement, including confidentiality, should not be made publicly available when it becomes a part of the judicial record.  In fact, it may very well simply depend on the jurisdiction where your case presides.  However, you may also be able to creatively develop a strategy and solution that will meet the needs of all involved.

To read the article, click here.